On Tuesday’s episode of CNBC’s Mad Money, Jim Cramer highlighted Kimberly-Clark Corporation (NYSE:KMB) as a defensive holding for traders trying to lock in earnings from high-flying technology shares and reallocate into lower-risk worth performs. After years of sluggish price motion, Cramer famous that the shopper giant has finally established a steady backside, anchored by a main strategic transformation:
This one’s finally discovered its footing after struggling for years. Best of all, Kimberly-Clark realized it wants to consolidate, which is why it’s buying Kenvue, J&J’s outdated shopper health business. I need you to think there… Tylenol, Neutrogena, Listerine, Band-Aids. These are on a regular basis requirements that shoppers buy regardless of the state of the economic system or the price of gasoline. Doesn’t harm that Kimberly-Clark will pay you handsomely while you wait for the deal to close.
The Kenvue Catalyst and Defensive Moat
The acquisition of Kenvue Inc. (NYSE:KVUE), the shopper health business spun off from Johnson & Johnson (NYSE:JNJ), gives Kimberly-Clark control over on a regular basis staples including Tylenol, Neutrogena, Listerine, and Band-Aids. In Cramer’s view, these important health and wellness merchandise generate regular money movement through every financial cycle because shopper demand stays fixed regardless of broader financial situations or fuel costs. In addition, the mixture offers a credible path toward accelerated income growth, increased working margins, and substantial cost-reduction alternatives while defending the business from international competitors.
Valuation Snapshot and Dividend King Status
Despite its long-term stability, the stock has traded sideways for an prolonged period, creating what Cramer describes as a uncommon discount in an otherwise wealthy market. Trading at roughly 14 instances this 12 months’s earnings, Kimberly-Clark sits close to its lowest valuation a number of in a decade, outside of its transient dips earlier this 12 months, he famous. Alongside that discounted entry level, the company delivers substantial income to affected person shareholders. Management raised the quarterly payout to $1.28 per share earlier this 12 months, driving the dividend yield up to 4.74%. With 54 consecutive years of annual dividend will increase, Cramer famous that Kimberly-Clark Corporation (NYSE:KMB) holds the standing of a Dividend King, paying traders a beneficiant yield while ready for the Kenvue transaction to close.
Jim Cramer Says Kimberly-Clark’s Acquisition of Kenvue Creates a High-Margin Powerhouse
Photo by Adam Nowakowski on Unsplash
Q2 Earnings Outlook and Tactical Buying Strategy
Kimberly-Clark is set to report its second-quarter financial outcomes in two weeks on August 4th. Cramer made it clear that traders should not expect a blowout efficiency, emphasizing that the stock is a regular compounder rather than an aggressive growth play:
I’m not anticipating a blowout quarter… This is not a runaway state of affairs. This is one of those issues I’m making an attempt to show you that you can add while you take a little bit of tech out of your portfolio. I’m trying for shares with good potential upside that will also let you sleep at night time. Kimberly-Clark is a defensive business with a 4.7% yield and a low cost stock that is protected from a lot of international competitors. Plus, the Kenvue acquisition gives it a credible path towards quicker growth, increased margins, and a much broader health and wellness platform. I’m not anticipating the second quarter report to be the catalyst here, but I think it’s a great long-term alternative. In truth, I truly hope it sells off in the quarter… letting you buy some on weak spot.
Wall Street establishments maintain a firm stake in Kimberly-Clark Corporation (NYSE:KMB), with institutional traders proudly owning roughly 93.39% of it, according to Refinitiv. As per Insider Monkey’s database, 59 hedge funds held a place in the stock during Q1 2026, the same as the prior quarter. Still, the whole greenback worth of hedge fund holdings elevated by over $1 billion sequentially. Two Sigma Advisors was the company’s most outstanding shareholder after growing its stake by 112% to almost $500 million.
On the short aspect, information reveals an unusually elevated short float of 14.56%. While a double-digit short curiosity normally exhibits Wall Street’s lingering skepticism over a company’s long-term growth prospects, it is not the case for KMB. KMB is half of a merger arbitrage play. When arbitrageurs execute a stock-for-stock merger strategy, they buy the goal company (KVUE) and short the acquirer (KMB) at the fixed exchange ratio (0.14625 shares of KMB per KVUE share). By shorting KMB against their long KVUE place, arb desks get rid of equity market direction risk and lock in the deal unfold between the market costs and the whole acquisition consideration. Upon transaction closing (scheduled for H2 2026), the new KMB stock issued to Kenvue shareholders will be used immediately to cowl the short positions. This dynamic explains why KMB’s short curiosity surged from roughly 1.5%–2.0% of float in mid-2025 to over 14% of float.
Valuation Clash: KMB’s Bargain Multiple vs. Consumer Staple Peers
When measured against the broader shopper staples sector, Kimberly-Clark Corporation’s (NYSE:KMB) worth proposition becomes even more pronounced. Industry titan Procter & Gamble Company (NYSE:PG) instructions a premium ahead a number of close to 21 instances earnings while offering a dividend yield of roughly 3%. Meanwhile, main rivals like Colgate-Palmolive Company (NYSE:CL) and Unilever PLC (NYSE:UL) commerce at roughly 24 instances and 17.4 instances earnings, respectively.
Kimberly-Clark Corporation’s (NYSE:KMB) discounted 14.5 instances earnings a number of and 4.74% yield give income-oriented traders superior money technology alongside significant valuation upside as the Kenvue Inc. (NYSE:KVUE) integration unfolds.
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